• Med-Tech in the Midwest: Are the Coasts Missing Out?

    223625v2-max-250x250As a Cleveland native, I often find myself reading about some advanced medical technology that’s bubbling out of Northeast Ohio. To learn more about what’s really happening in the Midwest, I recently caught up with Mike Stubler, the Pittsburgh-based managing director and the cofounder of Draper Triangle Ventures, who nicely answered my very broad questions.

    You focus on healthcare in the Midwest, right?

    About 25 to 40 percent of what we do is med-tech. The balance is generally information technology, enterprise and cloud computing. But we’ve had great success with med-tech companies and frankly, we can’t ignore them; we live in a very rich environment for it. The Cleveland Clinic is arguably one of the world’s most renowned research institutions and a pioneer in coronary care. Meanwhile, here in Pittsburgh, the University of Pittsburgh Medical Center is a great research institution.

    What’s changing in the industry? My understanding is that the focus used to be on licensing technology to big pharmaceutical companies, but now there are more development groups helping to commercialize these technologies.

    A lot of different efforts come into play now: Universities, government-backed venture development groups, other combined programs. Many more people are now focused on getting this research commercialized rather than just licensing the technology to somebody. [The Cleveland-based, early-stage support organization] JumpStart has probably made 60 or 70 investments at this point. Innovation Works [an equivalent program focused on Southwestern Pennsylvania’s startup ecosystem] has made dozens of investments to which we pay very close attention, to see what’s coming through.

    We’ve also seen more companies getting funded with super angel kinds of rounds. You didn’t see that five or six years ago.

    Do you have more or less venture competition than you did, say, five years ago?

    Well, you see some big coastal firms coming in, especially once you see a company gain some traction. Sequoia Capital just did a bio deal in Cincinnati last year. Drive Capital [newly cofounded by former Sequoia investors Mark Kvamme and Chris Olson, who are investing in Midwestern startups] has closed on $180 million of a $300 million target. I think when Mark Kwamme came from Silicon Valley, he was probably cynical but quickly saw the opportunities here.

    Unfortunately, the contraction that’s taking place throughout the industry is also taking place in the Midwest, so there are fewer firms. We’ve always been more collaborative than cutthroat, as in the Valley, where every one is fighting for the same great deal. But those that are here are really trying  to work together more so than ever.

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